Correlation Between Notion Vtec and Resintech Bhd

Can any of the company-specific risk be diversified away by investing in both Notion Vtec and Resintech Bhd at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Notion Vtec and Resintech Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Notion Vtec Bhd and Resintech Bhd, you can compare the effects of market volatilities on Notion Vtec and Resintech Bhd and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Notion Vtec with a short position of Resintech Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Notion Vtec and Resintech Bhd.

Diversification Opportunities for Notion Vtec and Resintech Bhd

0.03

Correlation Coefficient

Notion Vtec  Resintech Bhd

Significant diversification

The 3 months correlation between Notion and Resintech is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Notion Vtec Bhd and Resintech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resintech Bhd and Notion Vtec is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Notion Vtec Bhd are associated (or correlated) with Resintech Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resintech Bhd has no effect on the direction of Notion Vtec i.e., Notion Vtec and Resintech Bhd go up and down completely randomly.

Pair Corralation between Notion Vtec and Resintech Bhd

Assuming the 90 days trading horizon Notion Vtec Bhd is expected to generate 2.7 times more return on investment than Resintech Bhd. However, Notion Vtec is 2.7 times more volatile than Resintech Bhd. It trades about 0.08 of its potential returns per unit of risk. Resintech Bhd is currently generating about 0.02 per unit of risk. If you would invest  107.00  in Notion Vtec Bhd on September 23, 2024 and sell it today you would earn a total of  21.00  from holding Notion Vtec Bhd or generate 19.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Notion Vtec Bhd  vs.  Resintech Bhd

Notion Vtec Bhd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Notion Vtec Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Notion Vtec disclosed solid returns over the last few months and may actually be approaching a breakup point.

Resintech Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Resintech Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Resintech Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Notion Vtec and Resintech Bhd

The main advantage of trading using opposite Notion Vtec and Resintech Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Notion Vtec position performs unexpectedly, Resintech Bhd can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Resintech Bhd will offset losses from the drop in Resintech Bhd's long position.

The idea behind Notion Vtec Bhd and Resintech Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.